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Do Japanese Expatriates Matter for Foreign Subsidiary Performance? A Role-Based Analysis of Three-Wave Panel Data

Jesper Edman and Riki Takeuchi

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: One of the key challenges for Japanese multinational enterprises is where or whether to employ headquarter expatriates in the management of foreign subsidiaries. We contribute to addressing this issue by theorizing and examining how expatriates in different positions (e.g., CEO, Sales manager, HR manager or line manager) impact different aspects of subsidiary performance. We examine how expatriate positions influence two facets of subsidiary performance -- sales and productivity and how these effects are moderated by country-specific factors. Controlling for self-selection effects, we find that knowledge and economic distance between the destination staff and expatriate CEOs and sales managers have negative moderation interaction effects on subsidiary sales. Conversely, we find a statistically significant impact on productivity whereby locations with strong nationalist sentiment exhibit negative moderation interaction effects in the case of Japanese line managers. Taken together, our findings point to the contingent effects of both position-based and country-level factors when examining expatriates' impacts on subsidiary performance.

Pages: 28 pages
Date: 2021-06
New Economics Papers: this item is included in nep-int and nep-mig
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